California American Water and Monterey County will square off this week against critics of a proposed settlement agreement involving the failed regional desalination project.

Starting Tuesday, representatives from former regional project partners Cal Am and the county water resources agency, as well as a handful of participants in the proceeding from the state Public Utilities Commission's Office of Ratepayers Advocates, the third former regional project partner Marina Coast Water District and community activist groups, will be questioned about the prospective deal.

The hearings are at 10 a.m. Tuesday and Wednesday at the state Public Utilities Commission headquarters in San Francisco.

Cal Am and the county are backing a deal that would reimburse the county up to $3.5 million in its spending on the regional project in exchange for a promise not to enforce the county's requirement that all desalination plants be publicly owned. Cal Am customers would pay for at least $2.8 million of the county's project costs. Both entities also agree not to sue each other over the ill-fated proposal.

Critics, led by the ratepayer advocates, have argued the proposed agreement shouldn't be approved by the commission because it's premature and so much information related to the county's spending on the project has been kept secret.

In an analysis filed Oct. 22, the ratepayer agency argued the commission should delay its consideration of the agreement to allow a San Francisco Superior Court case aimed at determining the potential validity of the regional project agreements, and by extension who among the former project partners is to blame for its demise. The ratepayer advocates suggested the court's decision would ultimately help determine whether the proposed agreement is reasonable.

The ratepayer advocates also suggested the commission wait until after the conclusion of the criminal case against former county water board member Steve Collins, who is facing conflict of interest charges for being paid $160,000 by private firm RMC Water and Environment for work he did on the project while he was a public official.

The proposed agreement does not fully address the issues it attempts to resolve, according to the ratepayers advocates, because Cal Am customers who would end up paying the entire bill are not represented in the commission's review. It also doesn't avoid all litigation because it excludes the third project partner, Marina Coast.

In addition, the ratepayer advocates argued the move by Cal Am and the county to keep details of the county's regional project spending confidential made it impossible to tell if the agreement would benefit Cal Am customers by avoiding potentially expensive litigation, especially in the absence of any comparison of project costs versus potential legal challenges.

The ratepayer advocates also criticized the lack of detail in the county records, arguing they didn't include any information on what county employees were actually doing in relation to the project.

PUC judge Seaneen Wilson agreed with Cal Am and the county that the county's project spending could remain secret. All parties to the proceeding were required to sign a non-disclosure agreement to view even the redacted version of the records. The confidentiality agreement is broad enough that even parts of the ratepayer advocates analysis related to the records were redacted themselves.

Finally, the ratepayer advocates argued that even the redacted records showed county spending that should not qualify for reimbursement, and suggested only about $765,000 should be paid.

Meanwhile, George Riley of Citizens For Public Water and Ron Weitzman of WaterPlus were even more direct in their criticism, arguing that the agreement's shroud of secrecy helped ruin the public trust and raised suspicions about criminal and ethical misconduct in relation to the project, as well as the specter of trading public policy for money.

In rebuttal testimony, Cal Am officials Rich Svindland and David Stephenson, and county water agency general manager David Chardavoyne argued that both parties had agreed the county's project costs were reasonably incurred, and they avoided considerable potential legal and other expenses by seeking a settlement. Besides, Chardavoyne argued, the proceeding is supposed to consider a deal designed to avoid ongoing and potential litigation, and related expenses, and not to engage in a "prudencey review."